This is what I have discovered over the years. It's generally not worth bothering training people to trade because of a few different things... 1. They have too much fear. I had a friend recently who was interested in learning to trade but he's just got too much fear. He's not going to be able to manage a position properly... Say he enters a trade At a resistance level and the market moves higher. Even on paper he panics out and can't hold his ground to exit on the retracement. Look at the attachment. This is yesterday. A good trader will strategically reposition himself if the market is moving against him slowly, while a bad trader will just panic out into the high... 2. They don't understand they have to trade what the market gives them... If it's trending, you must trade like it's trending. If it's a slow range trade you must trade like it's range trading. Instead they try to scalp tiny moves instead of playing the game the market is playing... These are some key flaws people have... There are a few others too but these are real important. They just don't understand that the market moves in a continual retracement cycle in a slow trend because pro traders are following rules as the market trades along. They take profits into euphoria/resistance and hit the bid into fear/support... If the market is in a slow trend there is no reason to panic out of position when the market moves against you a little bit. Just reposition the next minor trade cycle... If the market is moving with a 5 handle range, it's best to trade with a stop that matches the range. That allows you to reposition yourself instead of having the stop be hit. Manage your position as the market moves... Don't just let it hit stops. Just re-adjust your position next trade cycle.
Smaller traders can just exit with a profit if possible and re-enter the next resistance/support area. Big traders trading thousands of cars have to continually average because the market doesn't have enough liquidity for them to just move in and out. I once saw a cme trained pro trader managing 500 cars in overnight session and just nailing it. He had to average/in out through each cycle in the trend because he was just in too large of a position for the liquidity level of the market. Shifting too many cars at once would move the market and cost him. If you hang around ToS chats long enough you sometimes see some pro traders come in and show off in the pre-market session. The other retail traders that were hanging out in the chat were just in shock at how he was playing trades perfectly through what others would call "noise". Of course... He said by judging the volume moving past that it was likely there were only around 3 big players in the market with him working it at the time. The weird thing about the market is that even though you see a lot of contracts going past... One big player in the market has a HUGE influence on the natural market motion. I'm not exactly sure the exact amount... But, to not move the market you have to be trading like 1/10th of the average minute to minute volume over like 10 minutes. Anyone know the exact numbers? Cramer once demonstrated how he could move the market around to show off. LoL... When your hand moves the market you lose money though. A lot of the liquidity that appears to be there on the L2 tends to appear and disappear a lot. The only people that know for a fact how liquid the market is trade hundreds to thousands of cars. I tell you though... At key turning points not all that many cars go past in the key areas as the best prices. Not many at all...
I mean, look at the amount of contracts being changed hands at the best prices into late day today... Very thin market until the volume picked up into close. Someone trading as little as 1k-2k emini's could decide the exact ticks every time where the market finds support or resistance in the uptrend in a market that thin just by where he starts to cover longs into resistance or re-buy into support. Anyone happen to know how liquid the SP futures are? The big cars?
Yes The second question is misplaced as you explained in item 2 of the OP. As an OT comment, if you wish to look at contracts changing hands, it is a good idea to display this record. By using the the number of contracts changing hands you can very easily determine the event rate of change in a given market. What is interposed between the number of contracts changing hands and the events happening is the largest activity in markets. The largest activity in markets is people who are changing their minds and taking behavioral actions (Doing non trading). A second and almost important non trading activity (and definitely more important than what you display) is getting in the way and being left at the gate unfulfilled. Finally, it will be important for you to discover who controls the market.
As for who controls the market. That is simple. The biggest and best traders in the market basically set the support/resistance levels. The market has a natural flow and momentum that is shifted back and forth as the 5% who make money work the market up and down. Even as a very small player... By selling into resistance areas and buying into support areas I am a small influence on the pattern, but I am still reinforcing the trading pattern... Think about it. I am not buying when the market is high, and I am not buying again till the market dips. Even as a small influence... I am helping reinforce the pattern. The market trading pattern is a self fulfilling prophecy of what the biggest and best traders are seeing and thinking... I have seen some CME trained pro traders who have their orders set and in place hours and sometimes even days before the market turns on their exact target levels. Only recently have I fully understood how they do it. The biggest traders in this market use a support/resistance targeting and rule system that shapes the markets movement. It seems like the alogo's and big traders all go by the same damn range break/trend ruleset. With the help of a tip from someone on here I solved the entire movement ruleset puzzle. Was just missing one last key piece. If you don't understand the rules of the market... It's like being entered into a chess tournament without knowing how to play chess and being expected to learn as you play. Tip for those in here... Study up on market trading range... Watching lower highs/higher lows vs lower lows, lower highs cycle to cycle as the market trades are key to judging actual trend direction.
In penny stock scams... I have known some people that have run them in the past, but never was in that business... A friend was showing me how they pre-decided and calculated exact targets for a move in a penny stock they were advertising illegally in online ads... The price level where the group would start distribution and at what levels for each member... He is out of that illegal business now I think... Personally, I use to believe that the eminis and bigger instruments were more free flowing and not constricted to exact rulesets... But recently I realized the damn things actually do follow exact intrday movement rulesets... I am starting to think the market follows the rulesets a little too close... The market patterns almost have to be algorithmically driven. Sometimes they are just too precision in their movement...
I believe it came about in the futures market where a contract or "car" was how much a railroad car could hold of say corn or wheat.